Political considerations were to the fore in the decision to create the euro. Going forward, however, economics moves to centre stage and the trade effects of the euro are at the heart of many issues, ranging from synchronization of business cycles to the benefits of euro area membership. In this talk, Richard Baldwin presents the findings of his new CEPR Report that marshals the best available empirical evidence on the size and nature of the euro's pro-trade effect. One of the findings is that being 'in' versus 'out' of the euro area has less impact on trade flows than previously thought. This is due to the fact that euro area membership has acted like a unilateral trade liberalization by the 'ins', which boosted their imports from the 'outs' almost as much as their imports from fellow euro-users.

Richard Baldwin is Professor of International Economics at the Graduate Institute of International Studies, Geneva as well as Policy Director of the Centre of Economic Policy Research (CEPR), London. He has published in the areas of international trade, regionalism, European integration, economic geography, political economy and growth. Richard Baldwin has consulted for the EU, OECD, World Bank, EFTA, USAID and UNCTAD.